NEW DELHI: The much awaited Comptroller and Auditor General's report on coal block allocation was on Friday tabled in the Parliament. The report has pegged the loss caused due to allocation of coal blocks at Rs 1.86 lakh crore.

CAG said private firms are likely to gain Rs 1.86 lakh crore from coal blocks that were allocated to them on nomination basis instead of competitive bidding, which amounted to the loss to national exchequer. The initial draft had estimated the losses caused to the government to be close to Rs 10.7 lakh crore.

The CAG in its report, tabled in Parliament, names 25 companies including Essar Power, Hindalco, Tata Steel, Tata Power and Jindal Steel and Power which have got the blocks in various states.

"Delay in introduction of the process of competitive bidding has rendered the existing process beneficial to the private companies. Audit has estimated financial gains to the tune of Rs 1.86 lakh crore likely to accrue to private coal block allottees," CAG said in a report on allocation of coal blocks.

The CAG said it has arrived at the estimates based on the average cost of production and average sale price of opencast mines of Coal India in the year 2010-11.

"A part of this financial gain could have accrued to the national exchequer by operationalising the decision taken years earlier to introduce competitive bidding for allocation of coal blocks," CAG said.

The auditing body said it is "of strong opinion that there is a need for strict regulatory and monitoring mechanism to ensure that benefit of cheaper coal is passed on consumers".

The CAG has not only recommended immediate coal block auction but also an FIPB like single window for clearances. "A Carrot and stick approach for productivity performance should be adopted," the report says.

On Coal India Ltd (CIL), CAG recommends synchronising the coal mining and transportation activities. It also suggests setting up of coal washeries.

The concept of allocation of captive coal blocks through competitive bidding was announced in 2004. However, government is yet to finalise the modus operandi of competitive bidding.

ET had earlier reported that the coal ministries have put together what senior officials hope will be a robust defence, in contrast to the government's fumbling performance in response to an earlier CAG report on irregularities in the telecom sector in 2007-08.

The government is likely to point out that it had never treated allocation of coal mines as a "revenue-generating exercise". "The intent of the government was to involve the private sector to invest in identified infrastructure sectors," a top government official, who is in charge of putting together the coal ministry's defence told ET earlier this week.